Market & outlook for successful investments
Growth rooted in land and property
The number of people over the age of 60 is rising year-on-year in Germany – and with it, the need for property that is suitable for older people. In addition to traditional retirement homes, serviced apartments and assisted living options are a priority: barrier-free living space that is equipped for the elderly and that comes with the possibility of professional services or care. Investments in this segment are highly sustainable due to demographics. And yet, currently not even 2% of all housing in Germany is designed to meet the needs of the elderly. The market is guaranteed and set for far higher-than-average growth for years to come, not least due to the wealthy baby boom generation, which is about to reach retirement age.
Investment in specialised retail buildings is also on the rise. Extremely resilient to the challenges of online retail, transaction volumes almost doubled in 2014 over the previous year to a total of 4.1 billion Euros. This continues an observable trend in the commercial property sector, and which is likely to continue also into the future, whereby specialist retailers are benefiting more than any other commercial property from current conditions and high rental interest from profitable retail chains. Restrictive approval practices that limit new builds are also causing the value of existing space to rise disproportionately.
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A solid asset class
Real estate compares favourably with other forms of investment. Investors will continue to keep an eye on the residential property market. Attractiveness of the German housing market: The attractiveness of the German housing market is particularly evident when compared internationally. According to OECD indices, it is less overvalued than elsewhere in terms of income and rents – for example, in Anglo-Saxon countries, but also in continental Europe, such as France, Switzerland, Luxembourg, the Netherlands and Denmark.
Real estate offers protection against inflation
Inflation leads to a general increase in prices. While money loses value, the prices of goods rise. Against the backdrop of the aforementioned supply shortage, real estate prices are rising particularly sharply.
Rise in rents
Low supply and expensive properties naturally also lead to a sharp rise in rents. The increase in short-term rentals, furnished rentals and a growing number of index-linked rents will also cause prices to rise further.